Porting your existing mortgage

Are you planning to move house and need a new mortgage? Perhaps porting your existing mortgage is something to seriously consider. In this article we tell you all you need to know about porting, the pros and cons in various situations, and how you can go about it.

What is porting?

If you’re buying a new house and already have a variable rate, fixed rate or tracker mortgage, you may want to think about whether you can - or want to - transfer that mortgage to the new property when you move. This transfer process is known as ‘porting’.

Porting means your existing mortgage rate and all of its terms and conditions go with you when you move. If your current mortgage deal includes early repayment charges, you would not have to pay them when porting.

The majority of mortgages are portable, so you can usually consider this option when looking to move house. However, there are a number of things to bear in mind.

How does mortgage porting work?

As we mentioned above, it’s your existing mortgage rate and the mortgage terms and conditions that are ported - not the actual mortgage. When you sell your current home, the mortgage associated with it is paid off to the lender and you move to the new property with a new mortgage, even if it’s the same mortgage product. It’s important to remember this, because it’s not simply a case of transferring everything with minimal involvement from your lender.

You still need to apply for a new mortgage in the usual way, just as you normally would when buying a new property. Don’t assume that porting is a foregone conclusion. Only when your mortgage lender has gone through all the standard checks and processes and confirmed that they’re happy to continue lending to you, will they consider porting your existing mortgage deal.

When you apply, your mortgage lender will assess your income, your expenditure and your personal circumstances to see if you meet their current criteria for lending. Some or all of these may have changed since you last applied for a mortgage (for example, if you have had a pay rise or started a family). You may also want to borrow additional funds, which has to be taken into account. If you want an instant estimate as to how much you can borrow based upon your household income, you can use The Mortgage Hut's mortgage calculator.

The lender will also undertake a survey and valuation of the property you plan to purchase before making a final decision. Once they agree to port your mortgage deal, you would normally complete the purchase of your new property and pay off the mortgage on the old one on the same day, thus ensuring a seamless transition. However, as this isn’t always possible, a significant percentage of lenders will still allow you to port your mortgage product provided that you complete on the new property within a certain period of time after redeeming the old mortgage. This period would probably be in the range of 30 to 90 days.

Will I still be subject to a credit check?

Yes. As described above, this is effectively a new mortgage application and subject to the usual credit checks. As your lender will run an affordability check based upon their current lending criteria, it’s a good idea to plan ahead and maintain a good credit rating in the period leading up to your move. You will also need to provide supplemental documentation, for example, identity documents, bank statements and several months’ proof of earnings.

 What advantages are there to porting a mortgage? There are several advantages to porting a mortgage, for example:

  • If your existing mortgage has a low or competitive interest rate that perhaps can’t be matched by the current range of products, you get to keep that rate and save yourself some money.
  • There should be considerably less paperwork to deal with, as your lender already has a lot of your details.
  • You have a (hopefully) solid history with your current mortgage lender, which means the lender is probably going to consider your new mortgage application - and potentially your request for additional borrowing - favourably.
  • If your existing mortgage product includes an early repayment charge (for example if you’re on a five year fixed rate deal with repayment charges within those five years), porting the mortgage will avoid paying those charges.
There are a few potential disadvantages. The principal ones to be aware of are: 
  • Tying yourself to your existing lender may not be beneficial to you. For example, they may not be willing to lend you the amount you want, or the mortgage terms might not be as attractive as those offered by a different lender.
  • Avoiding an early repayment fee is a big plus, but don’t lose sight of the overall cost of the ported mortgage. There might be better mortgage deals out there, either with your lender or with another one. You may well find that it’s better value in the long run to pay the penalty charges for leaving early and take advantage of a more competitive deal.
  • If you need to borrow extra money, your lender may ask you to consider taking out a new mortgage for that additional amount, meaning you'd have two loans to repay with different rates of interest. That additional product would also have all the associated fees of setting up a new mortgage, such as booking and arrangement fees.
It is definitely worth doing some research and calculating all the costs involved. Our mortgage advisers can offer an expert view on the products currently available and how they compare to your existing deal.

Can I port my mortgage if I’m moving to a lower value property?

Porting may work for you if you’re planning to downsize or move to a less expensive area, and you don’t intend to ask for any additional funds. You will still be required to pay a valuation fee for the new property, but will avoid other fees such as arrangement costs and early repayment charges, and should be able to port your current deal in a fairly straightforward manner.

One thing to bear in mind, however: there’s no 100% guarantee that your current lender will approve the ported mortgage, even if you don’t need to borrow as much money as you did previously. Your financial and personal situation may have changed since that original loan. Also, since the Mortgage Market Review in 2014, lenders have imposed stricter affordability checking. For example, if you previously borrowed £230,000, you may now only be eligible for £200,000 even if your circumstances have not changed.

What if I’m moving to a more expensive house?

If you need to borrow additional money to move house, porting could still be an option for you. It all depends on your lender and the criteria they impose. Any additional lending won’t necessarily have the same interest rate as your ported mortgage. Your lender will offer a deal from the current product range, which may not be as competitive as options from other lenders and leaves you with two different loans with potentially different end dates.

When should I choose porting as an option?

So in summary, you should seriously consider mortgage porting if you currently have a deal with a highly competitive interest rate (such as a tracker or fixed rate) that can’t be matched elsewhere and will still save you money even if you need additional borrowing. It’s also a viable option to avoid large early repayment penalties.

When should I not consider mortgage porting?

It may not be worth porting your mortgage if you aren’t facing early repayment or other fees for exiting your current deal, or if your existing mortgage isn’t particularly competitive compared to other rates now available.

Ensure that you check you’re on the best possible deal before you embark on mortgage porting. Take into account all the costs - not only exit penalties for your existing deal, but all the arrangement fees, booking charges and valuation fees that apply to a new mortgage. Our mortgage brokers can help you to assess all of the options and point you towards the most competitive deals.

If you need more information and want to speak to a mortgage consultant for expert advice on porting existing mortgages, why not call The Mortgage Hut today on 0300 303 2640 or make an enquiry here.

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